Swiss Franc Falls As SNB Slashes Rates By 25 Bps

(RTTNews) - The Swiss franc weakened against other major currencies in the European session on Thursday, after the Swiss National Bank trimmed its interest rate for the fifth consecutive meeting to the lowest since September 2022, amid heightened downside risks to inflation.

The policy board, led by President Martin Schlegel, lowered the policy rate by 25 basis points to 0.25 percent from 0.50 percent.

This followed a 50-basis point cut in December. The bank has reduced the key rate by 150 basis points since March 2024.

Banks' sight deposits held at the SNB will be remunerated at the policy rate up to a certain threshold, and at zero percent above this threshold.

The central bank forecast inflation at 0.4 percent in 2025, which was slightly up from 0.3 percent projected in December and retained its outlook for 2026 at 0.8 percent. The inflation rate is seen at 0.8 percent in 2027.

In economic news, data from the Federal Customs Administration showed that Switzerland's foreign trade surplus decreased in February from a month earlier as exports grew faster than imports. The trade surplus rose to CHF 4.28 billion in February from CHF 4.07 billion in January.

In real terms, exports climbed 4.2 percent monthly, reversing a 3.9 percent decline in January. Imports also rebounded 3.3 after falling 1.4 percent in the prior month.

Investors await the Bank of England's rate decision due later in the session, with the central bank widely expected to keep interest rates on hold due to tariff uncertainties and the British government's impending tax hike for employers.

In the European trading today, the Swiss franc fell to a 3-day low of 168.60 against the yen, from an early high of 169.49. The franc may test support near the 165.00 region.

Against the U.S. dollar, the Swiss franc dropped to a 2-day low of 0.8814 from an early 3-1/2-month high of 0.8756. On the downside, 0.91 is seen as the next support level for the franc.

The franc dropped to a 0.9583 against the euro, from an early near 9-month high of 0.9531. The next possible downside target for the franc is seen around the 0.97 region.

Against the pound, the franc edged down to 1.1436 from an early high of 1.1370. If the franc extends its downtrend, it is likely to find support around the 1.16 region.

Looking ahead, the Bank of England announces its monetary policy decision at 8:00 am ET. The BoE is likely to sit tight on rates today as inflation remains sticky. The nine-member policy committee is widely seen holding the rate at 4.50 percent in a split vote.

In the New York session, Canada PPI and raw material prices for February, U.S. Current Account data for the fourth quarter, U.S. weekly jobless claims data, existing home sales for February and U.S. Consumer Board's leading index for February are slated for release.